Intel Q3 2019: NSG Business Continues to Lose Money But Promising Signs Emerge

Counterpoint has been tracking Intel’s Non-Volatile Memory Solutions Group (NSG) performance for years since it’s one of top NAND flash players. Intel recently announced its Q3 2019 financial results, and most of its business verticals reported record revenues. The Data Center Strategy Group (DCG), Internet of Things Group (IOTG), and NSG all hit record revenues during the quarter. Even the Client Computing Group (CCG) hit the highest revenues in four quarters. Of note is the performance of Intel’s NSG business that delivers NAND Flash memory products, which continues to face challenges, but is finally showing promising signs for the future.

The NSG business set a record high of US$1.29 billion, a 37.2% and 19.3% growth quarter-on-quarter (QoQ) and year-on-year (YoY), respectively. This is because a majority of Intel’s NAND Flash is used to support its DCG business, which generated revenues of US$64 billion in Q3. The Exhibit one shows Intel’s quarterly NSG performance from 1Q16 to 3Q19.

However, while NSG’s revenues were at a record high, NSG’s operating loss of US$499 million, remains a concern. The company attributed the operating loss during the third quarter to decreasing NAND prices and the absence of an expected grant associated with Intel’s NAND factory.

Intel’s main markets are high-performance computing, financial services, cloud service providers and the Internet of Things. It lacks other applications, such as smartphones, to increase sales. Therefore, its cost will be higher than other competitors because of smaller economies of scale.

Further, Intel has fewer opportunities to sell its NAND flash business. Most of its 3D NAND flash is used to support its data center services. It converts 3D NAND Flash from 64 layers to 96 layers and then to 12X layers. The 3D NAND flash technology of each player somehow is different. If Intel sells its own internal NAND manufacturing facility, it may need to rely too much on other plants in the future, which will limit the development of the data center business.

Intel’s 3D XPoint can be designed for cache memory for PC, solid state drives (SSD) for both PC and server, as well as a persistent memory for servers. In fact, 3D-XPoint-based persistent memory can increase overall system performance and demonstrate differentiation. However, the adoption rate of Intel’s 3D XPoint-based cache memory in PC remains low, and it is difficult to foresee much progress. Similarly, 3D XPoint-based SSD will also encounter strong competition from Micron, which co-developed 3D XPoint.

Going forward, the operating loss of Intel’s NSG will improve as the ASP/GB is expected to be flat or decline mildly in the next two quarters. This is because the power outage at the KIOXIA and Western Digital factories and the reducing inventory has reduced the global NAND supply.



Brady Wang has more than 20 years working experience in high-technology companies from semiconductor manufacturing to market intelligence, and strategy advisory. Brady’s major coverage in Counterpoint is semiconductors. Prior to joining Counterpoint, Brady Wang worked for Gartner for 11 years. He started his career at TSMC as an engineer for 6 years.

Term of Use and Privacy Policy

Counterpoint Technology Market Research Limited


In order to access Counterpoint Technology Market Research Limited (Company or We hereafter) Web sites, you may be asked to complete a registration form. You are required to provide contact information which is used to enhance the user experience and determine whether you are a paid subscriber or not.
Personal Information When you register on we ask you for personal information. We use this information to provide you with the best advice and highest-quality service as well as with offers that we think are relevant to you. We may also contact you regarding a Web site problem or other customer service-related issues. We do not sell, share or rent personal information about you collected on Company Web sites.

How to unsubscribe and Termination

You may request to terminate your account or unsubscribe to any email subscriptions or mailing lists at any time. In accessing and using this Website, User agrees to comply with all applicable laws and agrees not to take any action that would compromise the security or viability of this Website. The Company may terminate User’s access to this Website at any time for any reason. The terms hereunder regarding Accuracy of Information and Third Party Rights shall survive termination.

Website Content and Copyright

This Website is the property of Counterpoint and is protected by international copyright law and conventions. We grant users the right to access and use the Website, so long as such use is for internal information purposes, and User does not alter, copy, disseminate, redistribute or republish any content or feature of this Website. User acknowledges that access to and use of this Website is subject to these TERMS OF USE and any expanded access or use must be approved in writing by the Company.
– Passwords are for user’s individual use
– Passwords may not be shared with others
– Users may not store documents in shared folders.
– Users may not redistribute documents to non-users unless otherwise stated in their contract terms.

Changes or Updates to the Website

The Company reserves the right to change, update or discontinue any aspect of this Website at any time without notice. Your continued use of the Website after any such change constitutes your agreement to these TERMS OF USE, as modified.
Accuracy of Information: While the information contained on this Website has been obtained from sources believed to be reliable, We disclaims all warranties as to the accuracy, completeness or adequacy of such information. User assumes sole responsibility for the use it makes of this Website to achieve his/her intended results.

Third Party Links: This Website may contain links to other third party websites, which are provided as additional resources for the convenience of Users. We do not endorse, sponsor or accept any responsibility for these third party websites, User agrees to direct any concerns relating to these third party websites to the relevant website administrator.

Cookies and Tracking

We may monitor how you use our Web sites. It is used solely for purposes of enabling us to provide you with a personalized Web site experience.
This data may also be used in the aggregate, to identify appropriate product offerings and subscription plans.
Cookies may be set in order to identify you and determine your access privileges. Cookies are simply identifiers. You have the ability to delete cookie files from your hard disk drive.